Natural gas markets have rallied a bit during the course of the trading session on Friday but turned back at the highs. At this point time, the natural gas markets are reaching towards the $3.00 level, which of course is a large, round, psychologically significant figure that a lot of people will be paying attention to. Furthermore, it is an area where we have seen a lot of resistance in the past anyway, and of course we are in the wrong time of year to keep up this type of bullish attitude.
NATGAS Video 03.05.21
I recognize that a lot of this has something to do with the “reopening trade”, but at the end of the day the longer-term situation and natural gas is a market that is overbought, and most certainly oversupplied. There is a gap underneath that has yet to be filled, and that almost certainly will be attempted sooner or later. It is because of this that I am looking for signs of exhaustion that I can start selling, as warmer temperatures are certainly going to drive down demand regardless of what happens on the industrial side. If we break down below that gap, then it is likely that the market is going to go looking towards the $2.50 level.
On the other hand, if we do break above the $3.00 level, I would not only be a bit surprised but would be looking to sell at the $3.20 level. Sooner or later, the cyclical trade comes back into the market, and quite frankly with over 15,000,000,000,000 ft.³ of proven reserves in the ground, natural gas is not a market that has a supply issue.
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